Week Ending January 27, 2012

President Obama’s State of the Union Address Calls for Boosting the Middle Class

President Obama’s State of the Union address to a Joint Session of Congress covered a lot of ground, but his primary focus was on sustaining the middle class by improving the economy and creating jobs. To get the job done, he called upon a sharply divided Congress to start working together. AFSCME President Gerald W. McEntee echoed this sentiment, urging Congress to “stop their games and get to work… President Obama has a plan to move our country forward, create jobs and find real solutions. The choices Congress makes in 2012 will determine whether we save the middle class. We can do that by enacting President Obama’s jobs agenda. Or we can focus on misguided policies that do nothing but give more tax breaks to Wall Street financiers and transfer even more wealth to those at the top of the economic ladder.”

Among the major themes of his speech, Obama outlined plans to revitalize the middles class and build “an America meant to last.” He said “we cannot go back to an economy based on outsourcing, bad debt, and phony financial profits.” Instead, he wants to rebuild American manufacturing and require millionaires and multinational corporations to pay more of the nation’s bills. One specific proposal he supports is the so-called Buffett Rule, named for wealthy investor Warren Buffett, who lamented that his secretary pays a higher effective tax rate than he does. Obama said he would propose legislation that ensures that any household making more than $1 million pay an effective tax rate of at least 30%.

The President also wants Congress to pass legislation that would take away tax breaks from corporations that move work overseas to avoid paying taxes in the U.S. He also called upon Congress to approve more export financing for U.S. firms, clean energy investment tax cuts, and move toward a renewable energy standard for utilities.

Other highlights included a call for mandatory high school attendance for students until they graduate or turn 18, increased job training, additional student aid, immigration reform, protecting homeowners from abusive lending practices, and creation of a new financial crimes unit to help crack down on fraud and abuse by the financial service industry. Many of the details of these and other proposals will come with the submission of the President’s budget in mid-February.

In his official GOP response speech, Indiana Gov. Mitch Daniels criticized the President’s focus on equity as overly divisive. Daniels sounded a familiar conservative message: that mobility, not economic equality, should be the real priority.

House and Senate Legislators Hold First Meeting on Payroll Tax Cut and Unemployment Insurance Extensions

Twenty members of a House-Senate conference committee convened this week in a public meeting to start the process of working out the terms of legislation (H.R. 3630) continuing the payroll tax cut and federal unemployment insurance benefits programs, both of which will expire at the end of February. Although representatives of both parties expressed support for continuing both programs, major differences remain, especially regarding the specifics of the unemployment insurance (UI) program. House Republicans are pressing for changes that Democratic conferees generally oppose. These include reducing the number of benefit weeks, creating major new barriers to qualifying for benefits and allowing states to tap their unemployment insurance trust funds to pay for any activity they determine could promote reemployment, including requiring a high school degree or GED or establishing programs in which UI claimants would have to work for their benefits by providing employers with free labor.

Also at issue in the conference committee are provisions that would head off a scheduled decrease in reimbursements for doctors under the Medicare program. House Republicans have proposed paying for the “doc fix” by making cuts that would harm Medicare beneficiaries. Another offset proposed to pay for this legislation would end eligibility for the Child Tax Credit for millions of tax-paying immigrant families. AFSCME believes that working families should be protected, and that any additional revenues to pay for these policies should come from the wealthiest Americans who can afford to contribute more.

Congress Close to Approving Aviation Bill

After months of intense negotiations, Senate and House leadership have reached a deal on the controversial Federal Aviation Administration (FAA) reauthorization bill, and it could be on the Senate floor for a vote as early as next week. In the meantime, the House and Senate passed a short term extension (H.R. 3800) which would continue the current authorization through February 17. The agency has been operating under short term extensions since 2007 due to Congress’s inability to overcome controversial issues and pass a long term bill.

Part of the deal, however, are changes to labor laws governing union elections for rail and airline workers which would require that 50% of workers sign cards before an election can be held. The current requirement is 35%. Rail and airline unions are speaking out against this provision. This is the same issue that caused the shut-down of the agency last year and the furloughing of 4,000 employees.

House Panel Backs Repeal of Long-Term Care Insurance Program

GOP House leaders are continuing their attack against the Affordable Care Act with an expected floor vote next week to repeal the law’s voluntary long-term care insurance program. Two House committees have already voted, largely along party lines, to repeal the Community Living Assistance Services and Supports (CLASS) program. The Department of Health and Human Services has suspended the program due to financing concerns, but left the door open to moving forward in the future. With a growing aging population, enabling middle-class families to afford long-term care is important because Medicare and private health insurance programs do not pay for the majority of long-term care services, such as personal care assistance (i.e. bathing, dressing and eating). AFSCME strongly opposes repeal of the CLASS program.

GAO Finds Privatized Medicare Plans Continue to Overcharge Taxpayers

Medicare Advantage plans are private plans that supplement traditional Medicare, cost taxpayers more than Medicare’s traditional fee-for-service program, and threaten the solvency of traditional Medicare. Congress and President Obama took action through the Affordable Care Act to reduce the overpayments beneficiaries and taxpayers pay to insurance companies. A recent report from the Government Accountability Office (GAO) found that Medicare could have saved $1.2 billion to $3.1 billion if the Centers for Medicare and Medicaid Services (CMS) adjusted payments to these private plans to reflect more accurately the health status their enrollees. The GAO found that the plans tend to reports their enrollees’ health as more severe – and warranting more payments – than is actually supported by medical records.

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AFSCME is the American Federation of State, County and Municipal Employees, AFL-CIO. Our 1.6 million members provide the vital services that make America happen. AFSCME advocates for fairness in the workplace, excellence in public services and prosperity and opportunity for all working families.